Myanmar targets LNG imports to fuel nation’s power surge

YANGON — Myanmar will begin importing liquefied natural gas as soon as 2020 to feed the country’s growing power demand, aiming to allay concerns among businesses about electricity shortages even as domestic gas output begins to drop.

The government gave the go-ahead at the end of January for three power projects that will run on imported LNG.

French energy company Total and Germany’s Siemens plan to build a 1,230-megawatt plant in the southern region of Tanintharyi. A joint venture by Chinese power plant equipment maker Zhefu Holding Group and Myanmar’s Supreme Trading will construct a 1,350MW plant in the coastal Ayeyarwady region. Both projects should include floating LNG storage and regasification facilities, with each plant expected to cost around $2.5 billion.

The third project involves expanding a gas-fired plant in Yangon run by TTCL, a Thai venture involving Japan’s Toyo Engineering. The company will begin importing LNG to supply the facility.

Myanmar has been a major natural gas producer since undersea fields were discovered in the 1990s. But with little domestic demand at that time, the Southeast Asian country exports 80% of its natural gas to nations including China and Thailand by pipeline under contracts with the fields’ developers. The rest is used for power production in Myanmar, accounting for 36% of the country’s electricity at present.

But power demand has grown steadily since Myanmar overhauled its economy in 2011 to encourage foreign investment. The Ministry of Electricity and Energy pegs the annual increase at 15%. Peak power consumption is expected to roughly double by 2025, from 3,190MW to between 6,000MW and 8,000MW.

Hydropower facilities, which provide 60% of Myanmar’s electricity, cannot be built fast enough to keep up with rising demand, as many of the country’s water sources are controlled by ethnic minorities whose competing interests must be taken into account. Nor can domestic natural gas fill the gap: Output by Myanmar’s four active fields has peaked, with a decline expected to begin in 2021.

The first question raised by potential investors always involves Myanmar’s electricity supply, Energy Minister Win Khaing said in an interview with state media. Of Japanese companies operating in Myanmar that reported management challenges in a Japan External Trade Organization survey last year, 83% cited power shortages or blackouts.

Yet relying on LNG imports to remedy these issues could create other problems. Natural gas exports provide a major source of foreign currency for Myanmar. They were worth around $3 billion in fiscal 2016, accounting for 25% of the country’s overall exports, government statistics show. Raising imports of LNG, a relatively pricey energy source, could damage Myanmar’s trade balance.

Though it is not unprecedented for net exporters of energy to become net importers, a successful transition relies on using improved electrical infrastructure to build up other export sectors.

Myanmar’s greatest hope may lie in ongoing exploration for deep-sea gas fields. Australia’s Woodside Petroleum said in August that it discovered additional gas deposits off Myanmar’s coast. The company continues to explore its interests in the region, and intends to make a detailed analysis of costs and other considerations as it weighs commercial development.

Developing deep-sea fields takes around a decade, during which time Myanmar still will need to take in some LNG. But the government’s push for floating LNG facilities — which can be relocated or scrapped if not needed — at the planned power plants offers hope that the country will not have to rely on imports for too long.

Source: Nikkei Asian Review

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